5 Tips To Become A Better Investor This Year

It's almost February and many of us have already let our new year resolutions fall by the wayside. Luckily, there's still time to get your investing smarts on track for 2012.

Here are some themes to keep in mind to help you become a better investor this year:

Be News Agnostic — Avoid being swayed by the news of the day, whether it’s good or bad. Focus on trends versus headlines. Expose yourself to thoughtful interpretation of what’s going on by following analysts, journalists and bloggers you trust.

Cash is Not Necessarily King — You may sleep better at night if you are invested in cash and thus avoiding the ups and downs of the market. However, cash has a price since it isn’t returning enough to cover even our current low inflation rate—so you are actually losing money when you are overly invested in cash.

Prudence is Queen — A diversified portfolio, modified for current economic, political and global circumstances, is the best approach. Make sure you are not over-invested in your company’s stock and that you have a good mix of various types of investments, including cash.

Time for Generosity — If your assets exceed $5 million as an individual or $10 million as a couple, you can reduce estate taxes in the future by making some strategic gifts to heirs now. The $5 million per person estate/gift tax exemption is going away by the end of 2012.

Give Plans Another Go-Around — Many experts are projecting lower returns on investments in the coming years. So this is a good time to get a financial plan—or refresh your last one—and assess whether you are still on track to meet your retirement goals.